Systems and methods for financing renewable energy systems

ABSTRACT

A method for financing renewable energy systems includes offering a home loan to a homeowner in which the interest payable by the homeowner are tax deductible. A lease is also offered to the homeowner for the installation and use of a renewable energy system. A deposit of cash proceeds from the home loan is put into a trust held by an escrow agent for the single purpose of paying lease payments for the lease as each payment becomes due. Such that the proceeds from the home loan are effectively used to defease the debt represented by the lease.

CROSS REFERENCE TO RELATED APPLICATIONS

This application is a continuation of and claims the benefit of U.S.patent application Ser. No. 12/046,236, filed Mar. 11, 2008 the contentsof which is hereby incorporated herein by reference in its entirety.

FIELD OF THE INVENTION

The present invention relates to renewable energy industry businessmethods, and more particularly to methods for financing and leasingrenewable energy systems.

DESCRIPTION OF THE PRIOR ART

Beginning in 2008 with the “mortgage meltdown”, tight credit marketshave led to two problems for the average American looking to benefitfrom a personal renewable energy system lease. They now need a muchhigher credit scores than two years before to qualify for a lease,because credit markets impact availability and pricing. And, lessorsbegan insisting on getting paid all the payments, or at least more ofthe payments upfront, e.g., by employing a “defeasance”. Most lessorsare now very averse to taking on the risk of unsecured credit.

Resources like coal, oil, and natural gas are not renewable, the knownreserves are being consumed rapidly, and burning them and transportingthem is a major cause of pollution and environmental damage. So, manypeople in general, and governments in particular, are looking for waysto get renewable energy systems launched and into mainstream use, bothfor profit, and for the environment we all share.

Many customers cannot come up with the big payment needed to prepay anenergy system, a long-lived asset, especially when they are alreadypaying down other higher interest loans.

The interest on home loans is tax deductible in many circumstances formost homeowners. The principle, even in a lease, is never deductible. Sowhat is needed is a way to maximize the tax deductions and incentivesavailable to homeowners wanting to install a renewable energy system.

Market revenues for solar, wind, biofuels and fuel cell cleantechnologies were $55 billion in 2006 and are expected to grow to $226billion by 2016, according to industry research firm Clean Edge (March2007). The federal government, utility providers, and city, state, andlocal agencies are offering incentives to make renewable energy moreaffordable for consumers. As a result, the investment market in theUnited States for energy efficiency is estimated to be $200 billion,according to the American Council for an Energy Efficient Economy.

Photovoltaic (PV) solar systems cleanly and silently convert sunlightinto electrical energy. System integrators can install solar panelarrays at the point of consumption, e.g., on a customer's roof or intheir side yard, to avoid transmission losses and costs. In addition,the electricity produced may be fed back to the utility grid at retailrates, which tend to be much higher than wholesale rates.

When exposed to strong light, the semiconductor devices in the panelsproduce low-voltage direct current (DC) electrical power, which is thenconverted to normal 110/220 volt utility-type alternating current (AC)by an inverter. The amount of energy produced by a single installationcan be a substantial percentage of, or exceed, that used by a typicalhousehold. But, the up-front investment costs are very high, and thepay-back period is very long. The average American cannot afford theexpense, nor deal with all the technical and legal complexities involvedat the start.

Tax incentives can soften the up-front bite, but they are difficult tounderstand and take advantage of, and the government is forever toyingwith the terms of qualification. Many other technical and legalchallenges also exist, and many local city building departments andlocal building trades lack the education, skill and training necessaryto permit or do the construction. So, many potential owners who areleaning toward installing a renewable energy system, get discouraged anddo nothing.

Typical residential systems retail for roughly $9-10 per watt DC. Anaverage home may be able to support panels capable of supporting aninstallation of 4-5 kilowatt (kW) DC, which gives a total system cost of$40K-50K. Commercial systems can range from 5-100 kW DC, or more.Commercial installations are typically financed by third parties,leased, or the subject of a Power Purchase Agreement (PPA) or energyservices contract. But, homeowners almost always pay cash for theirsystems, from savings or a home equity line of credit (HELOC) or otherdebt-like instruments. This large capital requirement further restricthow many homes actually get a solar system installed.

As a rule of thumb, each installed DC kW will produce roughly 1,500 ACkilowatt-hours (kWh) per year. Such can vary by latitude, rooforientation, weather, etc. Depending on the season, time of day, andlocal utility tariffs, a customer can expect to pay $0.05-$0.35 per kWh.Customers with large houses in hot climates tend to have significantelectricity bills due to heavy use of their air conditioning systems;summer bills can easily exceed $400 per month.

Utility customers can use the solar output to reduce their use ofutility power, and in many areas can sell back excess power to theutility.

Federal, state, and local governments, utilities, and agencies have putin place significant financial incentives for organizations that installsolar systems. Such incentives can offset the initial capital investmentrequired to get an organization up and running on solar power. Inaddition, many states have created programs to encourage the switch tosolar power. California, New Jersey, New York, and Arizona all haveinnovative programs, and other states are quickly following suit, e.g.,see, Database of State Incentives for Renewable Energy (DSIRE)(http://www.dsireusa.org/).

For example, the California Solar Initiative (CSI) is an incentiveoffered to help commercial, government, non-for-profit and residentialcustomers acquire and pay for renewable energy systems. The type ofincentive awarded by the program depends upon the size of the systeminstalled. Most government and non-profit organizations are eligible forperformance-based incentives that are paid in monthly installments basedon the expected or actual recorded kWh of solar power produced over afive-year period. The more solar energy produced, the higher thepayment.

At the federal level, tax-paying system owners are currently eligible torealize up to 30% of the system cost as a tax credit against theirfederal tax. Alternative minimum tax is not offset. The credit isgenerally not available to foreign entities, government agencies,non-profits, and non-US-taxpayers. The credit is presently capped at$2,000 for residences.

Each system owner is generally also allowed to take five-year MACRSdepreciation, with a tax basis of 85% of the system cost. But,homeowners in particular cannot depreciate any elements of theirresidence. The current federal tax credit is set to expire at the end of2008, unless an extension is passed. The Economic Stimulus Act of 2008encourages investments by allowing 50% expensing for systems placed inservice in 2008.

The California CSI program provides for rebates to the system owner,based on the owner's tax status and the size of the system. Largesystems receive a Performance Based Incentive (PBI) rebate over fiveyears, based on actual kWh production. Smaller (<50 kW) commercial andresidential systems receive the rebate as a lump sum in an ExpectedPerformance Based Buydown (EPBB) almost immediately after the system isplaced into service.

These rebates are reduced in steps as more people participate in theprogram. The current status can be found online at www.sgip-ca.com. Somelocal municipal utility companies do not participate in the stateincentive program, while others promote their own unique incentivestructures.

In other states and utility districts, such as Oregon or North Carolina,incentives may include state tax credits, while in other locales, theincentives may be based on the RPS incentives, feed-in tariffs, or othermethodologies.

In both California and Federal programs, the system must be held by theoriginal system owner for at least five years to claim the full taxcredit. Early transfer may result in an IRS recapture of a pro-ratashare of the credits the benefits.

Data on recent applications to the CA state program, (seewww.sgip-ca.com), indicate that system integrators, not homeownersthemselves, were the largest residential installers in California in2007 YTD, both in terms of number of deals and kw installed. The dataalso provide useful reference points on $/W rates across the industry;$9-10/Watt seems fairly typical.

Companies like MMA Renewable Ventures and SunEdison are now providingthird-party finance solutions for renewable energy projects. Thesecompanies are investing in solar, wind, biofuels, biomass, biogas, andgeothermal energy generation. MMA Renewable Ventures says it is able tooffer customers and energy project developers substantial, consistent,reliable investment capital to meet and help drive growing demand.

Such companies enable customers to take advantage of predictably pricedclean energy, and to overcome the prohibitive costs of installation andongoing system maintenance. In a third-party proprietary financingmodel, a company such as MMA Renewable Ventures owns, operates, andmaintains renewable energy facilities. It sells the electricity to itscustomers under the terms of a solar services agreement (SSA) thatcontracts the electricity produced at a fixed rate. Other companiespartner with top-tier investors, project developers, and customers tobuild distributed clean energy generation plants. They then sellelectricity and, optionally, renewable energy credits to a site-hostunder a power purchase agreement (PPA). By offering comprehensive energyefficiency project financing, customers avoid up-front costs, andprojects are often cash flow positive from the start of commercialoperation.

SUMMARY OF THE INVENTION

Briefly, a renewable energy financial product embodiment of the presentinvention begins with a homeowner loan and an equipment lease. Proceedsfrom the homeowner loan are used to fund an escrow account thatguarantees a Lessor of the renewable energy system installation willreceive all their payments over the term and a defeasance fee. Thehomeowner qualifies for tax deductions on the home loan, and the Lessortakes on a very low risk. The installation qualifies for additionalenergy credits and tax incentives that can be sold or otherwise appliedto the profit margin.

These and other objects and advantages of the present invention will nodoubt become obvious to those of ordinary skill in the art after havingread the following detailed description of the preferred embodimentswhich are illustrated in the drawing figure.

IN THE DRAWINGS

FIG. 1 is a functional block diagram of a business model embodiment ofthe present invention;

FIG. 2 represents an administrative services embodiment of the presentinvention, and comprises demonstrating financial value and coordinatingrebate and tax incentives to arrange for financing;

FIG. 3A represents a community installation comprising individualPowerStations. The individual users of are banded together in acommunity project by a system integrator;

FIG. 3B represents a variation on a community installation in whichemployees of an employer are provided with a discounted solar system asa perquisite, and the employer benefits from renewable energy credits(REC's);

FIG. 4 represents a SolarGuard system embodiment of the presentinvention, many PowerStations produce renewable energy from the sun, andeach has a SolarGuard monitor that reports key operating informationabout their particular systems;

FIG. 5 represents an in-field sales method of operating a solar energybusiness;

FIG. 6 represents an installer services business model embodiment of thepresent invention;

FIG. 7 is a flowchart diagram representing a monitoring system thatoperates from a central server; and

FIG. 8 is a functional block diagram of a financial product and abusiness method of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

FIG. 1 represents a PowerStation™ embodiment of the present invention,and is referred to herein by the general reference numeral 100.PowerStation 100 is typically located at an owner's home, and comprisesphotovoltaic solar panels 102 that convert sunlight into low-voltage DC.The DC can be stored in batteries, or it can be further converted into,e.g., 110 VAC, 220 VAC, or 480 VAC, by an inverter 104. An electricpanel, or breaker box, 106 has the fuses and circuit breakers thatdistribute electricity to the user's electrical loads. Any excesselectrical power from the inverter 104 will push back through a utilitymeter 108, and can actually run it backwards. A utility grid may beunder contract or other legal obligation to accept and pay for suchexcess power produced. Often retail rates apply.

A SolarGuard™ monitor 110 tracks the performance of the solar system andreports the data to a central location over the Internet. The monitoringmakes sure the system is producing solar energy at optimum levels, andcomputed data is made available on a webpage. A PowerPortal™ 112 allowsusers to log in to a secure website to check the system performance, asreported by the SolarGuard monitor 110. Users can find out how muchpower the system is generating at any time.

Each PowerStation 100 can be standardized or unique, configured to thecustom specifications of each user. In a business model embodiment ofthe present invention, a system integrator goes to the location todetermine the best size, mounting arrangement and positioning for thePowerStation 100. A detailed design and installation plan can then beengineered.

PowerStations 100 work in parallel with the electric utility grid,allowing electricity to be generated during the day, and loads to drawfrom the grid during the night. In many areas, the system integratorsets up a net metering relationship with the local utility, enablingusers to sell excess power back to the utility during peak hours whenrates are high, and to buy electricity during non-peak hours when therates are low.

FIG. 2 represents an administrative services embodiment of the presentinvention, and is referred to herein by the general reference numeral200. Administrative services 200 comprises demonstrating financial value202 and coordinating rebate and tax incentives 204 to arrange forfinancing 206. Plans are submitted so building permits and inspections208 can be obtained for construction 210 of the solar system, as inFIG. 1. The involved utilities are coordinated with interconnectionadministration 212 and the solar system is put into operation 214. Areturn-on-investment (ROI) is maximized 216 and maintenance 218 servicemay be negotiated. At an end-of-life 220, or end-of-lease, the fullvalue of the installation of the solar system is realized for the user,the lender, the system integrator, and the government.

Demonstrating the financial value 202 includes sending experts to thesite and discovering how energy is used. The financial incentivesavailable are identified, including rebates, tax, and special programsthat a user or their business may be eligible. The system integratorobtains and completes the paperwork and follow-up required to receivestate rebates. The financing can include floating rebate incentives, byonly billing for the post-rebate amounts. Tax documentation is providedto enable a tax advisor to file the appropriate tax returns to takeadvantage of the available tax credits and deductions. Building permits,inspections, and all interactions with local permit offices arecoordinated by the system integrator, and representatives are presentduring the final site inspection to deal with any issues that come up.

The system integrator further initiates the necessary agreements withthe local utility company and schedules the required site inspections. Apayment strategy is tailored to meet the user's needs and designed tomake good financial sense well into the future.

The SolarGuard monitor 110 enables continuous monitoring of the keyperformance variables of the system, and transmit the data through theInternet to specialized servers. If the system is underperforming,alerts are sent to call attention to the situation. The collected datais accessible online for customers or other approved entities to view.

During the investigation and design phase, an expert may consult on howthe user can lower their energy consumption and increase the savings.Each energy efficiency expert evaluates the insulation, ill-fittingwindows and doors, old and outdated light fixtures, thermostat settings,office equipment with go power-save modes when not in use, occupancysensors that automatically turn off lights when a room is vacated,heating and cooling systems, and which utility rate schedule will beoptimal.

Finance products include power purchase agreements (PPA's) and leases.Non-taxable customers are provided with solar energy power and monthlypayments that are often less than their current utility bill, withlittle or no up-front costs and off-balance sheet solutions. The PPA'shelp guard a company against the destabilizing effects of rising utilityprices. The organization's risk is reduced by paying only for what thesystem produces under the PPA or lease.

Public and non-profit organizations can implicitly benefit from the taxincentives for which they would otherwise not be eligible, and rebatesavailable through local, state, and federal governments. Theseincentives are significant, and can amount to more than 75% of the totalsystem cost.

Generating clean energy has a social utility and can produce goodwillthat translates directly into better business.

One return-on-investment (ROI) on a solar system comes from the avoidedcost of utility bills that would have been paid instead of solar power.Most organizations see returns of 8-15% on their solar investments. InCalifornia, where grid electricity costs have consistently risen by morethan 5% per year, the ROI can be even better. The cost of a solarinstallation can usually be recovered within 5-7 years, depending onwhere the customer's facility is located, and how much electricity theyuse.

Utility companies will often bill customers with tiered rates ortime-of-use, rather than on flat fee basis. For a tiered rate, the planbegins with a baseline allocation of power. The more “units” ofelectricity customers consume above that baseline, the more they pay perunit. Solar power replaces the higher-tiered power first by taking theload off the top. Customers can thus experience significant savingsimmediately.

When users switch to solar power in certain jurisdictions, such as ininvestor owned utilities in California, they can be converted to atime-of-use billing system. The rates are higher during peak hours thanduring off-peak hours. The solar system will produce when the sun isbrightest and the day is hottest, heavy air conditioner use and powerdemand on the grid makes these the peak times. Any power in excess ofwhat they use is sold back to the utility grid at retail prices. Atnight, the solar system stops producing, but the users draw from thegrid at much lower off-peak prices. During the spring and summer months,customers can accumulate credits. These can be used to offset thecustomer's energy use during the winter months with its shorter daylightperiods.

Finance leases, e.g., capital leases, conditional sales, or dollar buyout leases, may work best if the solar power user intends to keep theequipment after the end of the lease. The main advantage of this type oflease is that it gives the user the option to purchase the equipment fora nominal fee. Payment terms on finance leases tend to last close to theexpected useful life of the equipment.

True leases, also called tax leases, operating leases, or fair marketvalue (FMV) leases, do not typically last as long as the full expectedlife of the equipment. At the end of the lease, the user can choose tohave the equipment removed without incurring further obligations, orpurchase it at a fair market value. Payments on true leases generallytend to be lower than those on finance leases. The lessors have theopportunity to resell the equipment when the lease ends.

One of the main benefits of true leases is that lessors may be able tofully deduct their lease payments and claim incentives which accrue tothe equipment owner for tax purposes; these savings can be passed on tothe lessee in the form of lower rents. In contrast, the IRS considersfinance leases little more than installment purchase plans. As a result,although finance leases let customers spread the customer's paymentsover time, they are not tax advantaged in the way true leases are, andlessees frequently cannot utilize the tax incentives available to them.

A leveraged lease is a tax-advantaged, asset-based financing thattypically qualifies as an operating lease for accounting purposes, and atrue lease for tax purposes. It can provide 7-30 years of off-balancesheet financing priced below the lessee's alternative borrowing rate. Ina leveraged lease, a trust is established with equity and non-recoursedebt components. The transaction is structured such that the equityinvestor is considered to be the owner of the equipment, both foraccounting and tax purposes. From the lessee's perspective, the lease isan off-balance sheet financing with footnote disclosures.

A leveraged lease allows high-grade credit lessees to take advantage oftheir low cost of capital to achieve low stable rental rates over a15-25 year term. The system integrator arranges high leverage debtfinancing based upon the quality of the lease and user's credit rating.This attractive debt financing usually results in a lower cost ofcapital to the system integrator and therefore a lower lease rate forthe user. If the transaction meets minimum size requirements andincludes rapidly depreciable items, tax advantaged equities can beprovided to the project thereby further lowering the user's lease rate.Similar to the conventional lease, a leveraged lease is usuallystructured to qualify as an operating lease in accordance with GenerallyAccepted Accounting Principals (GAAP).

A lease which qualifies under financial accounting standards FASB 13 asan operating lease, has the following four criteria: (1) The lease termdoes not exceed 75% of the useful life of the equipment, (2) Title tothe equipment does not automatically pass to the lessee at the end ofthe lease term, (3) The lease can not have a bargain purchase option,and (4) The present value of the minimum rentals must be less than 90%of the equipment cost. An operating lease may not add balance sheetasset or liability, and the rental payments are treated as an operatingexpense. A True Lease is not necessarily an Operating Lease.

A structured operating lease can mean the lowest possible cost for acorporate client due to its use of a variable interest rate, lack ofamortization, and its short term. This lease type requires the lessee tomaintain complete economic control of the property as well as accept alleconomic risks and rewards of ownership. Unique to this structure, thelessee maintains responsibility for the residual value of the asset atthe end of the lease. At the end of the initial lease term, the lesseecan either renew the lease at the then prevailing rates and terms,purchase the property for the initial development or acquisition cost,or sell the property and generate either a gain or loss based upon thevalue at the time the option is exercised. This lease/financingalternative is structured to qualify as an operating lease in accordanceGAAP. It can also be based upon a fixed rate, which results in aslightly higher lease rate. This alternative is not available forproperties previously owned by the corporate client. Consequently,sale-leaseback transactions cannot be arranged using this alternative.

A single investor lease (SIL) is a tax-advantaged asset-based financingwhich typically qualifies as an operating lease for accounting purposesand a true lease for tax purposes. Depending on the customer's position,the SIL can provide 7-25 years of off-balance-sheet financing pricedbelow the client's alternative borrowing rate. The transaction isstructured so the lessee is not considered the owner for eitheraccounting or tax purposes. From the lessee's perspective, the lease isoff-balance sheet financing with a footnote disclosure. Such product isapplicable for new and used equipment, project financings and some formsof real estate. Benefits to customers can include improved earningsthrough lower rental payments, hedging against equipment obsolescence,attractive after-tax financing rates, and diversification of fundingsources.

In a business model embodiment of the present invention, a typicalsystem integrator purchases the major components for a renewable energysystem from large, established vendors. Solar panels usually have amanufacturer's warranty of 10-25 years, and the inverters are typicallywarranteed for 5-10 years. Such hardware presently represents about 50%of the total system cost. A user 108 could be required to cover the costof an inverter replacement after the inverter's warranty expires. Thepower output of a typical solar panel degrades about 0.5% per year, andwill likely provide a useful life of thirty years.

The system integrator or a 3^(rd) party, provides some well-definedrepair and maintenance functions during the life of the installation.The operating performance of each installation is remotely monitored,e.g., to anticipate breakdowns and interruptions of revenue earning.Each project generally requires insurance against risk of theft, damage,etc.

Leases are generally more complex than a standard purchase. But, leasesallow customers to realize the best possible savings on going solar, andthey allow the customer to avoid substantial upfront capital costs ofinstalling a solar system. The benefit of federal incentives, whichwould otherwise go unclaimed, can be split between the customer, systemintegrator, and the investor. For tax purposes, such leases must qualifyas an operating lease. For generally accepted accounting procedure(GAAP) purposes, such leases can also qualify as an operating lease,although it may be possible to obtain different treatment for GAAP thanfor tax accounting.

System integrator leases are secured by the equipment, and may bestructured to be secured by a lien on the underlying real estate. Eachpotential lessee/customer is screened to meet credit acceptancecriteria. During the lease period, the customer makes lease payments.The payments may be flat across the life of the lease, or they may bestructured to escalate over time in step with energy cost inflation orsome other index. At around $200/month, depending on system size, manytypical homeowners will find that they can act in an environmentally andsocially responsible way while spending the same, or less, onelectricity costs.

Residential customers are given fair market value buyout options, whichare priced so that they would not fail one of the capital lease tests.At the end of the lease, each customer can choose to extend the leaseand continue making payments, purchase the system at a fair marketvalue, or end the relationship and return the equipment.

Making existing equipment more energy efficient is one way to meetgrowing energy demand. Energy efficiency projects can improve profits,help avoid power outages, and delay the need for new power plants. Theannual market for energy efficiency in the USA has been estimated at$200 billion. Typical energy efficiency projects have payback periods offive years or less. Energy efficient equipment can also increaseproperty values. A commercial building owner can generate $2-$3 in addedasset value for every one dollar invested in energy efficiency.

In a business model embodiment of the present invention, a systemintegrator finances, owns and/or manages non-residential energyefficiency projects. Combined energy efficiency retrofit projects forinvestment can include heating, ventilation and air conditioning (HVAC),high-efficiency lighting, motor and pump replacements, high-efficiencyrefrigeration systems, energy management and controls systems, highefficiency cogeneration systems, boiler and furnace replacements, etc.

Up to one hundred percent of the financing for the capital cost of aproject can be provided so customers are not required to make anysignificant project capital outlays. Whenever possible, efficiencyprojects are integrated with solar or other renewable energy systems, tobetter maximize combined economic, environmental and investmentbenefits.

A power purchase agreement (PPA) embodiment of the present inventionincludes a service contract between the system integrator and acustomer. The system integrator agrees to finance, own and operate asolar energy system at the customer's location and sell the electricityit generates to the customer for a pre-determined period. The systemintegrator agrees to offload the entire process of permitting,designing, procuring, and installing the system. It owns and operatesthe system, including operations, maintenance, and insurance. Thecustomer has the option to buy the system. The customer provides aninstallation site, and access to site for operations and maintenance,e.g., by land lease or recorded easement. Such projects can be cash flowpositive from day one, as the customer only pays for power the systemgenerates, and benefits from long-term fixed energy price for the fullterm of the contract. On the subject of the kinds of leases that wouldqualify for tax advantages, FASB 13, Accounting for Leases, establishesstandards of financial accounting and reporting for leases by lesseesand lessors. For lessees, a lease is a financing transaction called acapital lease if it meets any one of four specified criteria. If not, itis an operating lease. Capital leases are treated as the acquisition ofassets and the incurrence of obligations by the lessee. Operating leasesare treated as current operating expenses. For lessors, a financingtransaction lease is classified as a sales-type, direct financing, orleveraged lease. To be a sales-type, direct financing, or leveragedlease, the lease must meet one of the same criteria used for lessees toclassify a lease as a capital lease, in addition to two criteria dealingwith future uncertainties. Leveraged leases also have to meet furthercriteria. These types of leases are recorded as investments underdifferent specifications for each type of lease. Leases not meeting thecriteria are considered operating leases and are accounted for likerental property.

Operating leases are accounted for by the lessor in three ways. Theleased property is included with or near property, plant, and equipmentin the balance sheet. The property is depreciated according to thelessor's normal depreciation policy, and in the balance sheet theaccumulated depreciation is deducted from the investment in the leasedproperty.

Or, rents are reported as income over the lease term as it becomesreceivable according to the provisions of the lease. However, if therentals vary from a straight-line basis, the income are recognized on astraight-line basis unless another systematic and rational basis is morerepresentative of the time pattern in which use benefit from the leasedproperty is diminished, in which case that basis are used.

Lastly, initial direct costs are deferred and allocated over the leaseterm in proportion to the recognition of rental income. However, initialdirect costs may be charged to expense as incurred if the effect is notmaterially different from that which would have resulted from the use ofthe method prescribed in the preceding sentence.

Embodiments of the present invention are not limited to these specifickinds of leases, since leasing rules can change significantly in thefuture.

The sale of property subject to an operating lease, or of property thatis leased by or intended to be leased by the third-party purchaser toanother party, is not treated as a sale if the seller or any partyrelated to the seller retains substantial risks of ownership in theleased property.

A seller may, by various arrangements, assure recovery of the investmentby the third-party purchaser in some operating lease transactions andthus retain substantial risks in connection with the property. Forexample, in the case of default by the lessee or termination of thelease, the arrangements may involve a formal or informal commitment bythe seller to

(a) acquire the lease or the property,

(b) substitute an existing lease, or

(c) secure a replacement lessee or a buyer for the property under aremarketing agreement. However, a remarketing agreement by itself doesnot disqualify accounting for the transaction as a sale if the seller

(a) will receive a reasonable fee commensurate with the effort involvedat the time of securing a replacement lessee or buyer for the propertyand

(b) is not required to give priority to the re-leasing or disposition ofthe property owned by the third-party purchaser over similar propertyowned or produced by the seller. For example, a first-in, first-outremarketing arrangement is considered to be a priority.

If a sale to a third party of property subject to an operating lease orof property that is leased by or intended to be leased by thethird-party purchaser to another party is not to be recorded as a sale,the transaction are accounted for as a borrowing. Transactions of thesetypes are in effect collateralized borrowings. The proceeds from thesale are recorded as an obligation on the books of the seller. Untilthat obligation has been amortized under the procedure described herein,rental payments made by the lessee(s) under the operating lease orleases are recorded as revenue by the seller, even if such rentals arepaid directly to the third-party purchaser.

A portion of each rental may be recorded by the seller as interestexpense, with the remainder to be recorded as a reduction of theobligation. The interest expense are calculated by application of a ratedetermined in accordance with the provisions of APB Opinion No. 21,Interest on Receivables and Payables, paragraphs 13 and 14. The leasedproperty is accounted for, as prescribed in paragraph 19(a) for anoperating lease, except that the term over which the asset isdepreciated are limited to the estimated amortization period of theobligation. The sale or assignment by the lessor of lease payments dueunder an operating lease are accounted for as a borrowing.

Solar can be an expensive, complex undertaking if each homeowner triesto calculate the return on a major investment, find a reliableinstaller, and learn about inverters and time-of-use metering. Theshared knowledge and camaraderie of a community program makes eachproject much easier and more profitable.

FIG. 3A represents a community installation 300 comprising individualPowerStations 301-304. The individual users of PowerStations 301-304 arebanded together in a community project by a system integrator 306.Various equipment suppliers 308 and 310 are contracted by the systemintegrator 306 to supply the necessary components for the constructionof PowerStations 301-304 at a substantial discount. Discounts arepossible because of the volume of equipment involved in a singlecontract, the geographical proximity of multiple accounts, and inrespect of an on-going business relationship between system integrator306 and equipment suppliers 308 and 310. Similarly, system integrator306 enters into power purchase agreements (PPA) with a power utility 312in which the individual users of PowerStations 301-304 sell their excessenergy in large contracts otherwise only possible between utilities.

Community efforts go a long way toward bringing solar energy to themasses and making a bigger difference in the fight against globalwarming. The bulk discounts mean homeowners benefit from economies ofscale, making it cheaper to convert to solar and quicker to receive apayback on the investment. Consumer awareness about solar powerincreases, which aids future sales efforts.

By signing up clusters of homes, the system integrator 306 benefits fromeconomies of scale in equipment purchases, engineering, installation andpermitting. In a typical program, a community 300 that collectivelypurchases a total of 175 kilowatts of solar capacity can qualify fordiscounts off market prices for equipment and installation. A typicalhome under the program would thus pay around $8.00 a watt for a threekilowatt solar system, compared to a market price of $10 a watt for thesame solar system.

After factoring-in a state rebate and a federal tax credits for solarenergy, and the cost of city permits, the total investment would besubstantially reduced. By generating their own power and selling excesspower back to the grid, homeowners can sharply lower or eliminate theirelectric utility bills.

FIG. 3B represents a variation on community installation 300. Anemployee group 350 includes individual installation, e.g., asrepresented PowerStations 301-304. The individual users of PowerStations301-304 are employees of an employer 352 who wants to provideperquisites to its employees and benefit, e.g., from renewable energycredits (REC's). The installations are gathered together in a groupproject by system integrator 306. A certifying agency 354 empowers thesystem integrator 306 to verify energy production, aggregate partialREC's, and certify the REC's it issues to the employer 352.

FIG. 4 represents a SolarGuard system embodiment of the presentinvention, and is referred to herein by the general reference numeral400. System 400 communicates with many PowerStations 401-408 thatproduce renewable energy from the sun. Such solar power installationsare like that described in FIG. 1, and each can be related to the otherby location, who was their system integrator, who was their financer,who was their lessor, community interests, government jurisdiction, etc.Each has a SolarGuard monitor 110 (FIG. 1) that reports key operatinginformation about their particular systems. For example, data reportscan be collected periodically about current/voltage/power coming fromthe solar panels 102 (FIG. 1), outside temperatures at their respectivelocations, operating temperature of the inverter 104 (FIG. 1), userelectrical loads supplied by electrical panel 106 (FIG. 1), utilitymeter 108 readings, condition of the utility grid at that feedpoint,occupancy sensors, building temperature, etc. The information collectedis identified by station ID and forwards through the Internet 410 to aSolarGuard server 412.

The data collected is separated and post-processed for several differentinformation-fed business models. Such business models includemaintenance 414, monitoring 416, business tuning 418, renewable energycertificate programs 420, virtual utility 422, performance guarantees,insurance, data sales, etc.

Maintenance business model 414 operates to spot trouble in theequipment, or the way it's being operated, at each PowerStation 401-408.Each of the data points being monitored has a normal range, andexcursions outside these normal bands can be an early signal of trouble.However, some measures normally fluctuate as dependent variables on someindependent variable. For example, the time-of-day and day-of-the-yearcontrol whether there should be any sunlight at all. The solar panels102 cannot be expected to produce an electrical output between localsunset and sunrise. But if the solar panels 102 are not producing duringdaylight hours, then there may be a problem that needs to be analyzed orinvestigated further. Solar panel power output measurements can also becompared to local weather, other sensor measurements, past measurements,averages, and what other nearby PowerStations 401-408 are doing at themoment.

Maintenance business model 414 operates to remedy trouble. In somecases, the trouble might be fixed by downloading new software orparameters to the respective SolarGuard monitor 110, or inverter. Inother cases, an email or phone call to the user might do it. In moreserious or difficult situations, a repair crew can be sent out.

Maintenance business model 414 may also collect and analyze long-termtrends to spot equipment supply problems, user misunderstandings, andrecalls and retrofits. Conventional methods could be used in a suitablemaintenance program.

Monitoring business model 416 operates to monitor power output fromparticular installations and to help sharpen forecasts of what thesesystems are really capable of. The data collected can be analyzed andused in sales to tell customers what they can expect in the way ofperformance and up-time, and in power-purchase-agreements to confidentlycontract for maximum production commitments.

Monitoring business model 416 further operates to load manage power atdiscrete installations, e.g., to balance loads amongst installations inan area during peak times, or to shift loads from peak times to off-peaktimes at particular locations.

Business tuning business model 418 collects information to help thesales department give better pricing estimates and fit the expectedenergy production to the customer's needs.

Renewable energy certificate business model 420 accumulates,distributes, or otherwise sells “green tags”. According to Wikipedia,renewable energy certificates (REC's), also known as green tags,renewable energy credits, or tradable renewable certificates (TRC's),are tradable environmental commodities that represent proof that onemegawatt-hour (MWh) of electricity was generated from an eligiblerenewable energy resource. Before the present invention, it wasn'tpossible or practical for a small individual solar system installationto participate in REC trading markets

These certificates can be sold and traded and the new owner of the RECcan claim to have purchased renewable energy. While traditional carbonemissions trading programs promote low-carbon technologies by increasingthe cost of emitting carbon, REC's can incentivize carbon-neutralrenewable energy by providing a production subsidy to electricitygenerated from renewable sources.

Wikipedia says, in states which have a REC program, a green energyprovider is credited with one REC for every 1,000 kWh or one MWh ofelectricity it produces. An average residential customer consumes about800 kWh in a month. A certifying agency gives each REC a uniqueidentification number to make sure it doesn't get double-counted. Thegreen energy is then fed into the electrical grid, and the accompanyingREC can then be sold on the open market.

According to the Green Power Network, prices of REC's can fluctuategreatly (2006: from $5-$90 per MWh, median about $20). Prices depend onmany factors, such as the location of the facility producing the REC's,whether there is a tight supply/demand situation, whether the REC isused for RPS compliance, even the type of power created. While the valueof REC's fluctuate, most sellers are legally obligated to “deliver”REC's to their customers within a few months of their generation date.Other organizations will sell as many REC's as possible and then use thefunds to guarantee a specific fixed price per MWh generated by a futurewind farm, for example, or making the building of a solar power homefinancially viable.

The income provided by REC's, and a long-term stabilized market for tagscan generate the additional incentive needed to build renewable energysystems. One of the few non-profit U.S. organizations that sell RECs,Bonneville Environmental Foundation was instrumental in starting themarket for RECs with their Green Tag product. They use the profits fromGreen Tags to build community solar and wind projects and to fundwatershed restoration. Another non-profit currently selling RECs isConservation Services Group, which sells ClimateSAVE RECs generated fromwind, solar, and hydropower.

The virtual utility business model 422 allows for the organization ofenergy syndications, risk portfolios, and demand/load management. Someor all of the PowerStations 401-408 can be brought together in acollective in which they produce and demand power in a coordinatedfashion. The collective can enter into energy sharing and usagecontracts with the local utility, and thus be able to buy off-peak powerand sell on-peak power at attractive rates that are better than anyindividual or single business could manage on their own.

In a risk portfolio, the PowerStations 401-408 can all be broughttogether in a form of group insurance that protects each one of themfrom individual equipment failures and loss of production. The expenseand risk of point failures is shared by all.

In a demand/load management model, a virtual utility contracts with autility to limit individual point demand or total demand from a utility.It may agree to rolling outages, etc. Controls can be installed at eachsite to shed loads that are optional or discretionary, on request, orautomatically.

FIG. 5 represents a method of operating a business, and is referred toherein by the general reference numeral 500. A systems integrator 502 isengaged in the business of selling, installing, and operating renewableenergy systems for individual users 504. For example, a typical user 504would be the resident of a single-family home in the suburbs.

The system operator 502 prearranges investors and lenders inanticipation of sales, in a step 506. Credit services are engaged in astep 508 that would allow the system integrator 502 to secure lendingand/or investment commitments, e.g., over the phone, while in the fieldat a user's home. These could be supported by portable computers andwireless Internet access. The system operator 502 has an on-goingprogram, in a step 510, to collect operating data about the performanceof its previously installed systems, e.g., as described in connectionwith FIG. 4. Such data is analyzed to produce forecast models in a step512 for various proposed systems. Open-membership groups are created ina step 514 that would allow a new user 504 to join-in on a preexistingvirtual utility, PPA, community installation, etc.

In a step 516, a new user 504 shows interest and/or investigates thepurchase of a solar system, e.g., as in FIGS. 1-3. The system integrator502 makes an in-field sales call 518 in which the costs/benefits aredescribed, and pro-form a systems configurations and performance/benefitforecasts are demonstrated. For example, with the help of a portablepersonal computer and wireless Internet. If sold, the user 504 makes acommitment 520 and signs a contract 522. Credit services 508 are usedon-the-spot in the field to fund/close the deal, and the new user 504joins the open-membership group to share in their collective benefits.

Method 500 generates all the necessary contracts, rebate coupons,renewable energy certificates, tax credit forms and supportingdocumentation, in a step 524, and distributes these and the profits tothe various stakeholders.

The solar system, e.g., is installed in a step 526 with projectmanagement 528 provided by the system integrator 502. During use 530,the system installation is monitored in a step 532 and troubleshootingis used to access any anomalies. Repairs 534 are effectuated, e.g., byservice calls 536.

FIG. 6 represents an installer services business model embodiment of thepresent invention, and is referred to herein by the general referencenumeral 600. A first group 610 of solar installations is represented byuser systems 611-614. These are installed by a small installer 616. Asecond group 620 of solar installations is represented by user systems621-624. These are installed by another small installer 626. Installers616 and 626 do not operate on a large enough scale to have a significantdegree of bargaining power with suppliers, utilities, investors,financial institutions, etc. They may also lack the sophisticated tools,models, and monitoring facilities that a large system integrator 630has. So, system integrator 630 provides or coordinates financial, legal,business, and other services that they have bargained for withfinancial, legal, business and other institutions 632, 634, 636, etc.Each small installer 616 and 626 may be supplied by their own suppliers640 and 642, but the market power exerted by large system integrator 630allows it to use a special relationship or agreement with supplier 642to provide special equipment at attractive discounts.

FIG. 7 represents a monitoring system 700 that operates from a remotelocation, such as a central server, to monitor renewable energy systemoperation, and is similar to model 416 in FIG. 4. Monitoring system 700operates to monitor power output from particular installations in thefield. The individual owners have access to their own monitored datathrough a webpage posted on the Internet, and the system integrator canview individual or combinations installations.

In one application, such collected data is used to help sharpenforecasts of what the renewable energy systems are really capable of.The data collected can be analyzed and used in sales to contract withcustomers what they can be guaranteed in the way of performance andup-time. The results are useful in power-purchase-agreements to setmaximum production commitments. Embodiments of monitoring system 700 canmanage power loads at discrete installations, e.g., to balance loadsamongst installations in an area during peak times, or to shift loadsfrom peak times to off-peak times at particular locations.

In FIG. 7, monitoring system 700 is sent or queries data and informationprovided by many sources including SolarGuard monitors 110 (FIG. 1).Such comprises weather station, electrical usage, charge controller,inverter, and revenue metering reports from many subscriber clients eachspecific to the particular client. A step 702 collects these streams ofinformation, e.g., every fifteen minutes, using an Internet webserver. Astep 704 separates the data streams by client, and client identificationis used to template such data streams onto models of the clients'equipment configurations and topologies. A step 706 is then able to sortand group client data by categories, e.g., on an anonymous client basis.A common denominator can be applied, like all client systems using aparticular brand/model of inverter, or those belonging to a certainvirtual utility or community project. Workstations can then be used toaccess statistics, monitor operational flags, initiate/display reports,and control system operations.

A step 708 accumulates particular client/user information into theirrespective power accounts. A step 710 can assemble such information on aper account basis to issue client statements, revenue checks, invoices,and controls. Headquarters workstations can be used to accesssingle-client statistics, monitor operational flags, initiate/displayreports, and engage payables, receivables, and general ledger accountingoperations.

A step 712 posts selected information to the Internet on a webpage forthe respective user. Each user can see how much electricity they aregenerating/using, and the net amount they are exporting. Various kindsof charts and graphics are rendered in HTML to make the data easy tonavigate, absorb and understand.

A database 714 is used to store the information collected, and isparticularly useful for storing event logs. Such database can be studiedto see if any long term trends are at work that could ultimately resultin system degradation or a point failure.

Solar systems can supply a typical home's needs for electricity fordecades. But even months before it is noticed, unforeseen events andhidden problems like fallen limbs, tripped circuit breakers and erodedwires, can quietly cripple a system's performance. System 700 constantlymonitors and reports data on system performance, providing additionalassurance that solar investments remain productive and effectivethroughout their expected life.

In one commercial embodiment, The SolarGuard™ monitoring systemcollects, monitors and displays critical performance data from solarsystems, like production levels and local weather, and transmits thatinformation to webservers every fifteen minutes through the Internet.Specialized application software and technicians evaluate the data forperformance changes, and will call customers and help fix problemsshould they arise. Often, before the customer is even aware that thereis a problem. A customer-accessible Web portal provides live data feedsand other information on the status of their system day and night.

Competitive providers usually charge an additional fee for monitoringsystems, but in one business model, SolarGuard is included with eachsystem installed because its functionality is critical to long-termsystem performance and customer goodwill. The SolarGuard Web portalallows customers to see their solar investments in action. Watching ameter spin backwards used to be just about the only way one could see agrid-connected solar system at work. But with SolarGuard, customers canwatch online their solar data being collected on a whole new level ofinteractivity and information. Inside the web portal, customers can seehow their systems operate by viewing such data as output over time,weather information, and environmental savings equivalents, like carbondioxide emissions avoided. All are displayed in an easy to use and easyto understand graphical format.

Monitoring and reporting services can provide valuable systemsinformation using graphics, live system performance data, alertsnotification, and environmental benefit tallies. These can all beaccessed with any web-enabled device. Automated alerts on system issueshelp remotely diagnose systems and conduct preventive maintenance toensure systems are performing as designed. Issues can be resolved morequickly, system performance optimized, on-site visits reduced, andbetter customer satisfaction.

Sales teams can use webpage views as a powerful sales tool to showcaseyour successful installations and close more new deals. Live systemviews encourage customers to visit your website frequently to see howmuch energy their sites are generating, creating a stronger sense ofvalue delivered. Webpage views can be branded with company logos orenhanced with relevant advertising.

Systems integrators can generate performance reports and collectcritical field data to create regional and aggregate data reports tobenchmark system performance over time. The data is analyzed tounderstand the best ways for installation and how to improve systemquality. The installation sites can all be controlled using a commonsite manager. Administrators can get quick access to simple or detailedweb views of each site, and remotely monitor system health andperformance efficiently. Email notifications can be sent when systemfaults occur.

FIG. 8 represents a business method 800 for financing the sale of arenewable energy system to a homeowner. A two-component financialproduct 802 is provided to homeowners wanting to buy, install, andoperate, e.g., a solar energy system. Proceeds from a home loan or homeequity line of credit (HELOC) 804 are indirectly used to obtain and funda lease 806 for the purchase, installation, and operation of thenecessary equipment. Loan 804 uses the homeowner's home as collateral808, making the interest on the loan 804 tax deductible for thehomeowner. The lease 806, for example, is a 20-year equipment lease forsolar fixtures.

In one example, such lease provides a 5 kW solar system for $50K total,with a 20% residual of $10,000 to qualify it as a “true” lease. The 20%residual value is due in twenty years at the end of the lease if thehomeowner decides to keep the leasehold equipment. The $10,000 figure istherefore the future value (FV). The present value (PV), could be aslittle as $4,000, and the subject of yet a third component of financialproduct 802.

Without any defeasance, direct payments could be made by the homeownerto a Lessor 810. In a defeasance arrangement, a trust with a third-partyescrow agent 812 is set up to pay all the lease payments to the Lessor810 over full term of the lease. The escrow agent 812 would include aninstitution with a high credit rating, so the risk to the Lessor 810 inactually getting the payments in the future is much better thandepending on an individual homeowner. Such trust and escrow agent 812could make the difference with the Lessor 810 in making the lease atall, or could be used to reduce the costs of the lease 806 to thehomeowner by getting better rates or terms.

A construction company 814 has some pricing power and nets good profitmargins on lease based relationships by leveraging its volume,intellectual property (IP), and innovators advantage. Some of the profitmargin could be escrowed as a loss reserve, to cover non-payment at endof lease, loans, etc.

At least the initial payments by the homeowner on the home loan 804 aremade to a financial services company 816. It, in turn, may have otherinvestors and banking partners. After several payments are receivedwhich demonstrate the validity of the loan and the creditworthiness ofthe homeowner as the borrower, a seasoned loan 818 can be sold atpremium prices to holders-in-due-course 820. A further step wouldinclude securitizing home loan 802 in a portfolio that includesreachbacks for loans that do not perform to a particular standard.

In one financial product embodiment of the present invention, thehomeowner uses a home loan to prepay twenty years of payments as adefeasance to a lease management company. In accordance with generallyaccepted accounting principles (GAAP), the money goes into an escrow andis paid to a Lessor, e.g., in a manner that suits their target internalrate of return (IRR) decision criteria. The lease management company,the homeowner, or other assignee, gets the renewable energy credits(REC's, or GreenTags).

In a separate simultaneous, but still distinct transaction, a financialservices company provides a home equity line of credit (HELOC) ormortgage to the homeowner for $15 k, for example, one that is secured bythe home such that the interest will be tax deductible. The terms ofloan can be determined later, or could be fully amortizing or interestonly for a term of years so all the payments are deductible with aballoon payment at the end.

The internal rate of return (IRR) for a particular lessor is important,because it is a capital budgeting metric used by lessors to decidewhether investments should be made. The IRR is an indicator of theefficiency of an investment, in contrast to net present value (NPV),which indicates value or magnitude. The IRR is the annualized effectivecompounded return rate which can be earned on the invested capital,e.g., the yield on the investment. A proposed project is a goodinvestment if its IRR is greater than the rate of return that could beearned by alternate investments. The IRR should be compared to anyalternate costs of capital including an appropriate risk premium. TheIRR is defined as any discount rate that results in a net present valueof zero of a series of cash flows. In general, if the IRR is greaterthan a project's cost of capital, or hurdle rate, such project will addvalue for the company.

Using the examples above, the defeasance payment to pre-pay all thelease payments on time would be $15 k up front, and funded by the homeloan. Payments on a twenty year interest-only loan, at 8% interest, areabout $100 per month. For a customer with a 33% marginal tax rate, theirafter-tax cost would actually be about $67/month. At the end of thetwenty year term, the homeowner still owes the principal of $15 k andhas the option to buy out their system for $10 k, or have it removed.

The loan payment stream can be seasoned, and then the loan is held,sold, or securitized. Seasoning means allowing the payor/homeowner tomake a few payments to show any potential buyer of the promissory notethat the loan is a good one and is performing well. A seasoned loanrepresents a lower risk to the lender or note holder.

Just as the homeowner is prepaying lease payments in present valueterms, we can also give the option of them prepaying the “terminal orresidual value”. That is, if someone would need to pay $10 k twentyyears from now, they can buy out this obligation at the present value(PV) amount, e.g., $4 k. This could be a separate, and conceivablysimultaneous contract with the lease, home loan, and any present valueof future buyout.

Using such business method, a solar energy business could sell ahomeowner a 5 kW system for $100/month, or $67/month after-tax, with $15k due in twenty years. The lessor gets their target IRR, and less risk.The Lessor can hold onto asset for twenty years, or sell system andfuture value (FV) of payment to a financial services company after a fewyears.

A construction company or a solar asset management company gets themoney to build, monitor and operate, subject to market pricing. A leasecompany administers the leasing program for the investors, on afee-basis. A financial services company gets a stream of payments overtwenty years and/or partners with an outside lender, and requires someplanning or a preexisting relationship.

One alternative method would be to price it as a pay per action (PPA)instead of a fixed monthly payment. The HELOC application and/or leaseapplication processes would be best streamlined to minimize closingcosts and perceived barriers, e.g., using automation and the Internet.

In general usage, “refundings” issue new debt with proceeds used torepay previously issued, old debt. In a “current refunding”, the newdebt proceeds are used to repay the old debt immediately.

In an “advance refunding”, as in embodiments of the present invention,the new debt proceeds, the home loan 802, are placed with an escrowagent 808, and invested to pay at a future time the principal andinterest, or lease payments, on the old debt, the lease 804. The advancerefundings result in defeasance of debt.

Defeasance of debt can be either legal or in substance. A legaldefeasance occurs when debt is legally satisfied based on certainprovisions in the debt instrument even, though the debt is not actuallypaid. An in-substance defeasance occurs when debt is considered defeasedfor accounting and financial reporting purposes, even though a legaldefeasance has not occurred. When the debt is defeased, it is no longerreported as a liability on the balance sheet. Only the new debt, if any,is reported as a liability.

Debt is considered defeased in substance for accounting and financialreporting purposes if the debtor irrevocably places cash or other assetswith an escrow agent in a trust to be used solely for satisfyingscheduled payments of both interest and principal of the defeased debt,and the possibility that the debtor will be required to make futurepayments on that debt is remote. The trust is restricted to owning onlymonetary assets that are essentially risk-free as to the amount, timing,and collection of interest and principal. The monetary assets should bedenominated in the currency in which the debt is payable. For debtdenominated in U.S. dollars, essentially risk-free monetary assets arelimited to direct obligations of the U.S. government or those guaranteedby such. These include state and local government securities that theU.S. Treasury issues specifically to provide state and local governmentswith required cash flows at yields that do not exceed Internal RevenueService arbitrage limits, and securities backed by U.S. governmentobligations as collateral and for which interest and principal paymentson the collateral generally flow immediately through to the securityholder.

Monetary assets held by the trust, e.g., escrow agent 808, must providecash flows that approximately coincide, as to timing and amount, withthe scheduled interest and principal payments on the defeased debt.

The CPA Journal Online reports, in October 1994, that in-substancedefeasance is an attractive financing option for companies since itleads to smaller debt-to-equity ratios, bigger reported earnings andbetter credit ratings. (www.nysscpa.org/cpajournal/old/16373962.htm)Such financing method involves the depositing of cash assets into atrust held by the escrow agent 808 for the single purpose of payingprincipal and interest as a debt becomes due. In-substance defeasancepermits the trust to invest in risk-free securities for so long as thematurity and interest payments coincide roughly with the timing of thedefeased debt. The benefits of such financing methods are moderated bythe negative effects on cash flow and the qualitative effects theilliquidity causes. So the companies who can use it to best advantageare those that are able to counteract its cash flow effects.

These financial products can be extended into commercial setting, e.g.,a business or government agency.

While the lease and loan agreements are separate, the presentation ofthem can be together and can be configured based on personalpreferences, tax circumstances, credit, utility bill size, otherfinancial incentives. A “mix and match” presentation of products couldbe made, depending on the homeowners needs, and what financial serviceswill be offered to them.

An online platform could be hosted on the Internet to educate customers,and allow them to select lease and loan options that factor in their owninformation, circumstance, tax rates, credit information, etc.

The mirror side is a system for banks and leasing companies to posttheir loan and lease products and offer these packages to customers.Banks and leasing companies could sell or auction their loans, leases,and portfolios that they attract by such system.

A renewable energy system business product can include a loan to ahomeowner in which the payments by the homeowner are at least in-parttax deductible. A lease is made to the homeowner for the installationand use of a renewable energy system. A deposit of cash proceeds fromsaid home loan is placed into a trust held by an escrow agent for thesingle purpose of paying lease payments for said lease as each paymentbecomes due. Then, the proceeds from the home loan are effectively usedto defease the debt represented by said lease. All this can be includedin a web hosting allowing homeowners to evaluate on-line multipleoptions and variables in the price, term length, and security interestof a proposed installation and use of a renewable energy system. Aparallel web hosting could also be beneficial that would allow lendorsand lessors to offer on-line multiple options and variables in theprice, term length, and security interest of the proposed installationand use of renewable energy systems.

Although the present invention has been described in terms of thepresently preferred embodiments, it is to be understood that thedisclosure is not to be interpreted as limiting. Various alterations andmodifications will no doubt become apparent to those skilled in the artafter having read the above disclosure. Accordingly, it is intended thatthe appended claims be interpreted as covering all alterations andmodifications as fall within the true spirit and scope of the invention.

1. A method for financing renewable energy systems, comprising:displaying, by a computing system, home loan options and lease optionsfor a renewable energy system; receiving, by the computing system, afirst selection of a home loan for a homeowner from the home loanoptions; receiving, by the computing system, a second selection of alease for the homeowner from the lease options; offering the home loanto the homeowner in which the payments by the homeowner are at leastin-part tax deductable; offering the lease to the homeowner for therenewable energy system; and determining, by the computing system, adeposit of cash proceeds from said home loan into a trust held by theequivalent of an escrow agent for the single purpose of paying leasepayments for said lease as each payment becomes due; wherein, thedetermination of proceeds deposited from said home loan are effectivelyused to defease the debt represented by the future payment obligationsof said lease.
 2. The method of claim 1, further comprising: selecting ahome loan which is interest only.
 3. The method of claim 1, wherein theoffering the home loan includes an energy loan and the offering a leaseincludes power purchase agreement.
 4. The method of claim 1, furthercomprising: receiving a plurality of lease payments for said lease wheneach payment becomes due thereby seasoning said home loan such that therisk of any holder-in-due-course is reduced thereby; and selling saidhome loan to said holder-in-due-course.
 5. The method of claim 4,further comprising: securitizing said home loan in a portfolio thatincludes correcting for loans that do not perform to a particularstandard.
 6. The method of claim 1, further comprising: increasing theprofits of selling said renewable energy system by obtaining morefavorable lease terms and decisions from a lessor with particularinternal rates of return (IRR) decision criteria as a result ofdefeasing the lease payment obligations.
 7. The method of claim 1,further comprising: selling any renewable energy credits (REC's) thatobtain from installing or operating said renewable energy system.
 8. Themethod of claim 1, further comprising: increasing business operatingprofits with any tax incentives that are obtained from installing oroperating said renewable energy system.
 9. The method of claim 1,further comprising: pre-paying in present value money any residual dueat the end of a full term of said lease in future value (FV) money. 10.The method of claim 1, wherein the offering of said lease is such thatsaid lease qualifies for depreciation and capital gains and losses forat least said homeowner.
 11. The method of claim 1, wherein when thedebt is defeased, the debt is no longer reported as a liability on abalance sheet.
 12. The method of claim 1, further comprising paying, bythe computing system, a plurality of lease payments for said lease wheneach payment becomes due.
 13. A computer-readable storage mediumcontaining instructions for controlling a computer system to perform amethod for financing renewable energy systems, the method comprising:displaying, by a computing system, home loan options and lease optionsfor a renewable energy system; receiving, by the computing system, afirst selection of a home loan for a homeowner from the home loanoptions; receiving, by the computing system, a second selection of alease for the homeowner from the lease options; offering the home loanto the homeowner in which the payments by the homeowner are at leastin-part tax deductable; offering the lease to the homeowner for therenewable energy system; and determining, by the computing system, adeposit of cash proceeds from said home loan into a trust held by theequivalent of an escrow agent for the single purpose of paying leasepayments for said lease as each payment becomes due; wherein, thedetermination of proceeds deposited from said home loan are effectivelyused to defease the debt represented by the future payment obligationsof said lease.
 14. The computer-readable storage medium of claim 13,wherein when the debt is defeased, the debt is no longer reported as aliability on a balance sheet.
 15. The computer-readable storage mediumof claim 14, wherein the method further comprises paying a plurality oflease payments for said lease when each payment becomes due.